4 Are We There Yet Substantial Completion

ASHRAE Pittsburgh Chapter March 6, 2014

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ASHRAE Pittsburgh Chapter March 6, 2014

Are Are We There Yet? We There Yet? What What is "Substantial Completion" is "Substantial Completion" ? ?(…and (…and how do we know when we get therehow do we know when we get there?)?)

E. Mitchell Swann P.E., LEED AP

F. CIBSE, C.Eng

Principal

MDCSystems®

www.MDCSystems.com

Copyright E. Mitchell Swann & MDC Systems

Program Overview

� What is “Substantial Completion”

� Implication of the selected definition on actual project completion

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actual project completion

� New considerations in the industry

� Example circumstances

� Summary

� Questions & Answers

Program OverviewProgram Overview

� Are We There Yet? What is "Substantial Completion" and how do we know when we get there?

� "Substantial completion": These two words can chan ge the course of history. Well, the course of your pa yment history, anyway. Many contracts contain that phras e as

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the course of history. Well, the course of your pa yment history, anyway. Many contracts contain that phras e as a key indicator of major project milestones for the release of retainage, the start of warranty periods and more frequently everyday, the start up of energy measurement and verification programs. But the definition of "substantial" and "complete" are wide and varied. This program will explore the permutations and implications of the various interpretations of "sub stantial completion" and how it can affect the happy family that is your project team.

So…

what

is

5

is

Substantial Completion?

Some synonyms….(?)

Mechanical Completion

� Unit is essentially complete for start-up operation and test run. All major work is completed. Minor work not interfering with operation may not be completed, such as punch list and minor touch-up work.

(from dictionaryofconstruction.com)

6666

Some synonyms….(?)

Mechanical Completion

� Unit is essentially complete for start-up operation and test run. All major work is completed. Minor work not interfering with operation may not be completed, such as punch list and minor touch-up work.

(from dictionaryofconstruction.com)

Mechanical other stuff to do…

Completion7777

Beneficial Occupancy

When an owner of a property can use it before all the

construction is completed.(from Black’s Law Dictionary)

Use of a building, structure, Use of a building, structure, or facility by the owner for its intended purpose (functionally complete), although other contract work, nonessential to the function of the occupied section, remains to be completed. (emphasis added)

(from theconstructiondictionary.com)

Certificate of Occupancy

A document issued by a local government agency or building

department certifying a building's compliance with applicable building

codes and other laws, and indicating it to be in a condition indicating it to be in a condition

suitable for occupancy.

The purpose is to prove that, according to the law, the building is

in livable condition.

A certificate of occupancy is evidence that the building complies substantially with the plans

and specifications that have been submitted to, and approved by, the local authority.

(emphasis added)

So what is substantial completion?

The answer varies,

but…

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I know it when I see it! - Judge Potter Stuart

but…

So how about this?

Section A.9.8.1 (from the AIA 201 – General Conditions of the Contra ct for Construction) :� “the stage in the progress of the Work when the Wor k

or designated portion thereof is sufficiently compl ete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intend ed

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Owner can occupy or utilize the Work for its intend ed use.”

Sounds like….

� Is “mechanical completion” required? � Is a C of O required?

Why does this matter? The date of substantial completion can establish…

� …the date that the owner becomes responsible for the property, (the “clock” starts – builders’ warranty) ;

� …the date that a contractor is no longer fully

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� …the date that a contractor is no longer fully liable for delayed completion;

� …the date the “Statute of Limitations” clock starts (what’s this?) ;

� …the date the “Statute of Repose” clock starts (what’s that?) ;

The date of substantial

completion(…could become a day that might live in infamy.)

Builders Warranty :

…the hands of time….

� Written statement by a builder assuring that a project was completed according to a stipulated

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completed according to a stipulated set of standards. It protects the buyer from latent defects.

� Patent Defects

� Latent Defects

The date of substantial completion(…could become a day that might live in infamy.)

…a contractor is no longer fully liable for delayed completion

Liquidated Damages:� Monetary compensation for a loss, detriment, or

injury to a person or a person's rights or

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injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract. (Legal Law Dictionary)

(Think of it as "contract performance insurance.”)LIMITATIONS! Allowed when exact quantification of damages is dif ficult (but ARE “real”!)MUST be “reasonable” with respect to the “value” of the damages that could be incurred. NOT to be considered/”constructed as a “penalty”.


Statute of Limitations:� A law that restricts the time within which legal

proceedings may be brought.� …a fundamental part of European and U.S. law.

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…a fundamental part of European and U.S. law.� …apply to both civil and criminal actions, � …designed to prevent fraudulent and stale claims

� …after all evidence has been lost…� …after the facts have become obscured over time…

� …defective memory, death, or disappearance of witnes ses.

� …a defense that is ordinarily asserted by the defend ant � …the parties may either shorten or extend the prescr ibed time

period by agreement, such as a provision in a contr act.


Statute of Repose:� Provides a date upon which the action no longer can be

taken - it entirely cuts off an injured person's rig ht of action even before it accrues. …stricter deadline than statute of limitations

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� …stricter deadline than statute of limitations � …it may not be tolled by fraud, discovery of injury, etc.

� …neither an avoidance nor a defense� …because the cause of action does not exist after “r epose”

� …bars an action after a specified period of time has run from the occurrence of some event.� …but NOT injury or “discovery”

New considerations…� Commissioning

� between “complete enough” and “acceptable”

� Energy ( & resource) Performance M&V� “Green Certification”

� Outside the project “bubble”

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� Outside the project “bubble”

� Validation� Regulatory Hurdles

� Accreditation� Specialty Operations

New considerations…

Commissioning

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� integrated application of a set of engineering tech niques and procedures to check, inspect and test every ope rational component of the project, from individual functions , such as instruments and equipment, up to complex amalgamations such as modules, subsystems and syste ms.

New considerations

Energy (& resource) Performance M&V

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� “Green Certification”� A third party vetting of the

completed project?

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� ValidationPharmaceuticals biotechnologymedical devices

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� Accreditation� Hospitals

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� Animal Facilities

� Data Centers

So the on -going question is….

ARE

WE

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WE

THERE

YET?

So there can be variations upon a theme.

Let’s consider…

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Let’s consider…

Multi-story Laboratory Building

Program features� Biotech research� GMP compliant� BL-3 Suites

Building features� VAV HVAC

systems� DDC BAS

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� BL-3 Suites � Sterilization

operations� Laboratory

Information Management System

� DDC BAS integrated to existing campus

� Sterilization line by equipment provider

Commissioning� (total building)

New Critical Care Hospital

Program features� 400 std beds� 60 CCU\ICU beds

Incl. 20 bed burn unit

Building features� Provisions for TB

isolation� “Controlled

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Incl. 20 bed burn unit

� Operating Suites� Standard� Transplants� Burn\Trauma

� MRI Suites (2) � ASHE

Accreditation

� “Controlled Environment” Operating Theatres

� DDC BAS � MRI by equipment

provider

Commissioning

Convention Center Hotel

Program features� 500 Rooms� Meeting Rooms� Ballrooms

Building features� DOAS � LEED Platinum

� Connected to

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� Ballrooms� Restaurants� Fitness Center

� Pool� Spa

� Connected to Convention Center Plant

� Anchor for downtown redevelopment

� Location of next G8 + conference

What gets done after it’s “done”…

The sources of dispute

Impact of Liquidated Damages on Risk of Dispute

Things to think about

Contract language…� …to address specifics (when, what, by whom)� …for “phased” completion� …to define “acceptance”� …to define “acceptance”� …to address “what about”s

� …and “I thought you meant…”

…to consider…

time.

We are all faced with a series of

great opportunities brilliantly

disguised as insoluble problems.

John W. GardnerJohn W. GardnerJohn W. GardnerJohn W. Gardner

E. Mitchell Swann P.E., LEED AP, F.CIBSE, C.EngPrincipal - MDCSystems®[email protected] www.MDCSystems.com

Questions?

....

Licensed Professional Engineer: Pennsylvania, New Jersey, New York, Connecticut, California, Michigan, Illinois, Georgia, Kentucky US Green Building Council LEED Accredited Professional

Mr. Swann has over 20 years of extensive experience on both domestic and international projects in the areas of management consulting and problem solving, engineering design, project and construction management, forensic engineering and construction claims analysis. Mr. Swann’s career includes the analysis, evaluation and design of complex systems across a wide range of industries and buildings types including commercial, institutional and industrial facilities, hospitals laboratories, pharmaceutical manufacturing, microelectronic operations and data centers. Mr. Swann has chaired technical committee within national and international organizations and been a contributing author and editor for a number of technical publications and journals. He is a frequent speaker both nationally and internationally and is a listed member of

E. Mitchell Swann, P.E., LEED [email protected] Principal and Partner MDC Systems, LLC

of technical publications and journals. He is a frequent speaker both nationally and internationally and is a listed member of the speakers’ bureau in the Distinguished Lecturer program of ASHRAE. He has recently presented on Green Building issues in Abu Dhabi, Dubai, Delhi, Detroit, Chicago, Seattle, New York City, Indianapolis, Kansas City, Virginia and Delaware. He is a contributing author to the ASHRAE “Green Guide – The Design, Construction and Operation of Sustainable Buildings” and co-author of the ASHRAE Survival Guide to Design|Build Project Execution.

Professional Affiliations: American Bar Association, American Society of Heating, Refrigeration, and Air Conditioning Engineers, International Society of Pharmaceutical Engineering, US Green Building Council, Defense Research Institute

Other Activities:Pennsylvania Environmental Council - BoardThe Engineer’s Club of Philadelphia – Board of DirectorsEnterprise Heights CDC - Board ChairDrexel University - Alumni Board of GovernorsNational Association of Asian American Professionals (Philadelphia Chapter) – Board of DirectorsNational Society of Black Engineers Greater Philadelphia Chapter – President Emeritus

MDCSystems® Summary of ServicesProgram & Project Development

including…

� Performance Assessment & Benchmarking

Project Modeling including…

� “What if…” Scenario Analyses

� Variability/Sensitivity Analyses

� ‘Out of Bounds’/”Go – No Go” Limits

Forensic Analyses including:

� Building Systems:

� Architectural incl. Building Envelope

� HVAC/Mechanical, Electrical & Piping

� Structural

� Instrumentation & Controls

� Design Errors & Omissions (Standard of Care)

� Differing Site ConditionsLimits

Project Planning including…

� Feasibility Studies

� Master Scheduling including…

� Resource & Constraint Analysis

Project Monitoring including…

� Schedule Compliance

� Cash Flow & “Burn rate” projections

� Resource Utilization

Consulting Services including…

� Sustainability/Green Buildings

� Peer Review

� Practice Management

� Differing Site Conditions

Forensic Project Management ®

� Schedule Analysis

� Delay, Disruption, Suspension & Acceleration

� Labor Productivity & Inefficiency

� Scope Definition and Change

� Termination - Default or Convenience

� Procurement - Bid/Award Transparency

Forensic Accounting including…

� Valuation of Damages

� Overhead & General Conditions

� Business Interruption & Lost Profit

MDCSystems®

Providing Expert Project Delivery Solutions Worldwide

MDC Systems is a project and construction management consultancy with over 40 years of experience serving a wide array of clients and industries both nationally and around the globe.

MDC has worked on projects as diverse as residential property developments to pharmaceutical plants to highway excavation and construction.

MDC concentrates its services in primarily four areas:

program management, project management consulting, forensic engineering and construction claims consulting.and construction claims consulting.

One of the key facets of MDC’s professional staff is our expertise in the technology driven issues that are so frequently at the heart of today’s complex

projects.

MDC’s construction claims consulting practice combines all of the skills

inherent to our other service offerings and deploys it for our clients when and where projects don’t go quite as smoothly as everyone had hoped. MDC is an

industry leader in the area of construction schedule development and analysis including delay, acceleration, interruption and extended duration. MDC pioneered

the court tested and approved Time Impact Analysis methodology for scientifically analyzing construction schedules and the impact of events upon their execution and completion.

www.MDCSystems.com

Selected Recent Assignments Engineering Consulting and

Technical Analyses:

� Analysis of Moisture Migration and RH Control in a Microelectronics Product R&D Facility (Colorado).

� Analysis and Improvement of Energy Consumption at a “Green” School (Pennsylvania)

� Peer Review & Design Supervision for a Radiant Heating/Cooling Floor System (New Jersey)

� Peer Review of Schematic Engineering Design Effort for Hospital Complex

Project Management, Execution & Construction Claims :

� Excess Rock Excavation Claim on a Highway Project - Unforeseen Conditions (New Jersey)

� Electrical Contractor Inefficiency Claim on Multi-Prime Project (New Jersey)

� Electrical Usage Charge Dispute Between Landlord & Tenant (New York)

� Schedule Delays and Change Orders on multiple Airport Projects for Major Equipment Supplier (various)

� Schedule Delays and Associated Cost Design Effort for Hospital Complex (Qatar)

� Analysis of Formaldehyde Outgassing from Construction Materials (Pennsylvania)

� HVAC System Failures in Pharmaceutical Packaging Facility (New Jersey)

� Analysis of Process Technology Failure at Waste Treatment Plant (New Jersey)

� Analysis of Piping System Joint Failures at a Hospital central Plant (New Jersey)

� Analysis of Destructive Vibration\Harmonics on Large Industrial Compressors at a Chemical Plant (Louisiana)

� Schedule Delays and Associated Cost Overruns for Underwater Pipeline Project (Ireland)

� “Standard of Care” Defense - Design of a Food Processing Facility (Pennsylvania)

� “Custom & Practice” – Specifications Development and Bid Transparency Issues (California)

� “Standard of Care” Defense – Design and Documentation of a Pharmaceutical Plant using 3D Modeling (Texas)

� “Standard of Care” Plaintiff – Delay and Cost Overruns for a Pharmaceutical Plant using 3D Modeling (Singapore)

4 Are We There Yet Substantial Completion

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